A UK startup company offering details of farmers' markets has complained of being "crippled" after it was mistakenly labelled adult viewing on O2's mobile network.

Lovefre.sh, a location-based service for finding fresh food, discovered that it had been rated at "only suitable for over 18s" by a third-party company which provides content filtering for O2, and that users of its iPhone app – which has seen nearly 18,000 downloads from Apple's App Store since its launch – would only see a blank page.

Although O2 is the only network that has blocked Lovefresh, "the problem is that most iPhones in the UK are on O2," said Mark Spofforth, the company's co-founder and chief executive. "I'm despondent about it. It's just crippling."

A spokesperson for O2 said that it had been notified of the error and had moved to whitelist Lovefresh – but that the effect would not work through its network until early on Saturday morning.

But O2 has been criticised by its customers after it implemented the "age verification" system without warning on Thursday. Any of its 20m users who try to access a page that has been rated as 18+ will have to go through a verification page which demands a payment from a credit card.

The company insists that it has taken the step as a child protection measure. Previously it only implemented the block if the buyer or controller of a phone requested it, such as a parent buying for a child.

But the flip from the longstanding "opt-in" system to an "opt-out" system, where people have to make a payment on a credit card as an age verification measure – on the basis that credit cards are only available and accessible to over-18s – has annoyed users.

Users in its forums have worried that they are being scammed, and complained that O2 is "censoring" them.

O2 says that the move is not censorship, and that it is not profiting from the verification process. A £1 payment is made, but £2.50 is then refunded to the credit card and the phone is approved for full access.

O2 says that the reason for the switch is child protection: "To ensure that children are protected from inappropriate content when using the internet on their phones, we require customers to prove they are over 18 before they can use these sites. Access to 18+ rated websites is therefore blocked by default. Customers only have to age verify once."

A spokesperson acknowledged that people would have found it inconvenient and apologised for the lack of publicity for the introduction of the scheme. "It could have been handled better," the spokesperson said.